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Derivatives are financial market products whose values are derived from an underlying or group of underlyings, which can be bonds, stocks, commodities, precious metals, market indices, interest rates, etc. As a risk management tool, derivatives present a useful risk management tool for implementing risk mitigation or hedging strategies against financial risks, while also representing an alternative investment asset class, useful for pursuing cost-friendly diversification and investment strategies.
In the broader financial markets, they play a vital role in the supporting price discovery, competitiveness and market efficiency which helps attract capital flows, reduce cost of capital and deepen the financial markets, in support of economic development.
FMDQ Exchange is a pioneer in the Nigerian financial markets for organising Derivatives markets.